British elections: the UK’s new energy direction

The Labour Party said it would tackle green energy as a priority and made this one of its six key pledges if it won the UK elections in July. And it has been true to its word. 

Within days of his appointment as Secretary of State for Energy Security and Net Zero, Ed Miliband confirmed: “Our department will be at the heart of the new government’s agenda, leading one of the Prime Minister’s five national missions, to make Britain a clean energy superpower with zero carbon electricity by 2030.

“In line with the Prime Minister’s approach, this will be a mission-driven department, mobilising citizens, businesses, trade unions, civil society and local government in a national effort, where everyone has a role.”

The announcement was quickly followed by the appointment of Chris Stark, former chief executive of the Climate Change Committee and Director of Energy and Climate Change in the Scottish Government, to “lead a new control centre to turbocharge the government’s mission to provide Britain with cheaper and clean power.”

The centre was billed as “the first of its kind in government, with a relentless focus on accelerating the transition away from volatile fossil fuel markets to clean, homegrown power, to boost Britain’s energy independence and cut bills for the British people.”

Reassuringly, this policy focus is consistent with the expert steer that previous administrations, including that of Ed Miliband in the past, have received from Sir Dieter Helm, professor of economic policy at the University of Oxford, who has shaped the pillars of UK energy policy over the last 20 years.   

These pillars are based around the ‘energy trilemma’ of balancing security, cost and sustainability, and the natural tension between these objectives.

The control centre aims to work with energy companies and organisations including the regulator Ofgem, the National Grid and the Electricity System Operator to remove obstacles and identify and resolve issues as they arise. “This will speed up the connection of new power infrastructure to the grid,” said the government.

The new administration also launched a policy statement on onshore wind, a low-cost, highly scalable renewable generation technology that had been subject to a de facto ban under the Conservatives for the last decade.  

The Tory administration had made onshore wind developments subject to planning restrictions that in practice meant any opposition to a wind farm could prevent the project from moving forward. 

Now, said the government, “We are revising planning policy to place onshore wind on the same footing as other energy development in the National Planning Policy Framework. Alongside this we will consult on bringing large onshore proposals into the Nationally Significant Infrastructure Project regime, to support quick determination.”

At the same time, the new Chancellor, Rachel Reeves, and Business Secretary, Jonathan Reynolds, instructed officials to align the UK Infrastructure Bank and the British Business Bank under a new National Wealth Fund that will “invest in the new industries of the future.”

The government said £7.3 billion of new money would be allocated through the UK Infrastructure Bank to “unlock billions of pounds of investment in the UK’s world-leading green and growth industries.”

The Financial Times reported that the National Wealth Fund will start investing in areas such as green steel and gigafactories immediately. The fund’s money, to be spent over five years, is intended to drive a further £20 billion of private sector cash into low-carbon investment in the UK economy, it added.

Principally aimed at decarbonising Britain’s heavy industry, the fund’s cash will likely be focused on five areas: green steel, low-carbon hydrogen, industrial decarbonisation, gigafactories and ports. Importantly, the funding will be directed at meeting finance requirements in areas that may be deemed too risky for traditional backers.

Business Green said Labour had earmarked £1.8 billion to upgrade ports and build supply chains, £1.5 billion for new gigafactories, £1 billion to accelerate the deployment of carbon capture technologies and £500 million to support green hydrogen manufacturing.

The funding package “could represent a pivotal moment in the UK's journey towards a sustainable future," said the National Wealth Fund Taskforce, which Labour had appointed ahead of the election.

And all this is before the new government has fleshed out the details of one of its biggest energy transition pledges: the creation of a publicly owned company called Great British Energy that will work with industry and trade unions to deliver clean power by co-investing in leading technologies.

Labour has said it will endow Great British Energy with £8.3 billion over the next parliament. “Great British Energy will partner with energy companies, local authorities and co-operatives to install thousands of clean power projects, through a combination of onshore wind, solar and hydropower projects,” it said.

Even without Great British Energy, the scale of the changes introduced by the new government is impressive. 

The National Wealth Fund will provide a welcome shot in the arm for industries stuck on decarbonisation, and the notion of disbursing the money through the UK Infrastructure Bank, an existing entity, bodes well for the private sector.

Pacific Green secured a loan from the bank, alongside NatWest, to finance the construction of the 250 MW, 375 MWh Sheaf Energy Park in Kent. The project is due to become fully operational in 2025 and has signed a long-term optimisation agreement with SSE.

But perhaps the most significant move in these first few days of the new government has been to facilitate onshore wind planning. 

Planning is a challenge for all renewables, with 63% of the 4,000 or so applications for wind, solar and battery projects submitted between 2018 and 2023 never going ahead, according to Cornwall Insight research reported in the Financial Times. 

With its change to planning laws, the new government has indicated it is serious about improving the situation. The government wants to double onshore wind, triple solar power and quadruple offshore wind by 2030. All these will benefit from more streamlined planning. 

But onshore wind is where there is likely to be the biggest impact given that Tory policies saw little more than 2 GW of capacity being installed between 2017 and 2022, according to figures from the International Renewable Energy Agency.  

For reference, France installed more than 7 GW of onshore wind over the same period, and Germany built more than 8 GW. Clearly, the UK has a lot of catching up to do, and it is good to see the new government making this a priority. 

“Given the importance of the private sector in the UK’s future energy direction, at Pacific Green we are working on the contribution we can make through battery storage and other relevant technology options,” said Dane Wilkins, European managing director at Pacific Green. Stay tuned for more.